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Regulated Markets

and

Market Surplus

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Regulated Markets

A regulated market is one which aims at the elimination of the unhealthy practices.

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Objectives of market regulation

To prevent the exploitation of farmers.
To make the marketing system most effective and efficient so that farmers may get better prices for their produce, and the goods are made available to the customers at reasonable prices;
To provide incentive prices to the farmers to increase the production both in quantitative and qualitative terms
To improve the infrastructural facilities.

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Market/ Producers Surplus of Agricultural Commodities

Producer's surplus is the quantity which is made available to the non-producing population of the country.

The rate at which agricultural production expands determines the pace of agricultural development, while the growth in the marketable surplus determines the pace of economic development.

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Importance of Market surplus

Framing sound price policies: The knowledge of quantum of marketable surplus helps in framing policies which stimulates agricultural production.
Developing proper procurement and purchase strategies:
Checking undue price fluctuations

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Importance of Market surplus

Export/import decisions: If surplus is expected to be less than what is necessary, the country can plan for imports and if surplus is expected to be more than what is necessary, the the country will export.
Development of transport and storage system: The knowledge of marketed surplus helps in developing adequate capacity of transport and storage system.

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Types of producer's surplus:

The producer's surplus is of two types

Marketable surplus
Marketed surplus.

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Marketable surplus:

The marketable surplus is the quantity of the produce which can be made available to the non-farm population of the country. The marketable surplus is the residual left with the producer-farmer after meeting his requirement for family consumption, farm needs for seeds and feed for cattle,etc.

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Marketed surplus

Marketed surplus is the quantity of the produce which the producer farmer actually sells in the market, irrespective of his requirements for family consumption, farm needs and other requirements. The marketed surplus may be more, less or equal to the marketable surplus.

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Relationship between Marketed Surplus and Marketable Surplus

The marketed surplus is less than the marketable surplus when the farmer retains some of the surplus produce.
This is true when Large farmers generally sell less than the marketable surplus because they retain extra produce in the hope that they would get a higher price in the later period.
Farmer may substitute one crop for another crop either for family consumption purpose or for feeding their livestock because of the variation in prices

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Relationship between Marketed Surplus and Marketable Surplus

The marketed surplus may be equal to the marketable surplus when the farmer neither retains more nor less than his requirement. This holds true for perishable commodities.

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Factors affecting marketable surplus

Size of holding: There is a positive relationship between size of the holding and the marketable surplus.

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Factors affecting marketable surplus

Production: The higher the production on a farm, the larger will be the marketable surplus, and vice-versa.
Size of the family: The larger the number of members in a family, the smaller the surplus on the farm.
Requirement of seed and feed: The higher therequirement for these uses, the smaller the marketable surplus of the crop

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Factors affecting marketable surplus

Price of the commodity: The price of the commodity and marketable surplus have a positive as well as negative relationship.

The positive relationship assumes that farmers are price conscious.

Inverse relationship between prices and marketed surplus assumes that the farmers have inelastic cash requirement.

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Factors affecting marketable surplus

Nature of Crops

Non Food Crops

The marketable surplus of non-food (cotton, jute, rubber) crops is generally higher than that for food crops.

Food Crops food crops, like sugarcane, spices, oilseeds which require some processing before final consumption, the marketable surplus as proportion of total output is larger than that for other food crops.

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Factors affecting marketable surplus

Consumption habits: The quantity of output retained by the farm family depends on their consumption habits.

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